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iRhythm Technologies Announces Second Quarter 2022 Financial Results

·9-min read
iRhythm
iRhythm

SAN FRANCISCO, Aug. 04, 2022 (GLOBE NEWSWIRE) -- iRhythm Technologies, Inc. (NASDAQ: IRTC), a leading digital healthcare solutions company focused on the advancement of cardiac care, today reported financial results for the three months ended June 30, 2022.

Second Quarter 2022 Financial Highlights

  • Revenue of $102.1 million, a 25.6% increase compared to second quarter 2021

  • Gross margin of 68.8%, a 0.8 percentage point improvement compared to second quarter 2021

  • Cash and short-term investments of $204.5 million at June 30, 2022

  • Raised full year 2022 revenue guidance to range from $415 million to $420 million

Recent Operational Highlights

  • Reimbursement rates proposed by the Centers for Medicare and Medicaid Services (“CMS”) as part of the Proposed Medicare Physician Fee Schedule for Calendar Year 2023 that impact Zio XT for CPT codes 93247 and 93243

  • 510(k) FDA clearance granted for clinically integrated ZEUS system for the Zio® Watch, developed in partnership with Verily as clinical grade watch to detect and characterize atrial fibrillation and integrate with clinician workflow

  • Recent additions to the executive leadership team reflective of company's commitment to driving sustainable value and significant growth across multiple pillars

  • iRhythm to hold investor day on September 21, 2022, in New York City, with content to incorporate key elements of long-term business strategy, details of stated growth vectors and long-range financial targets

"We made steady progress in the second quarter, out-performing revenue expectations and delivering another quarter of record registrations in our core U.S. business, fueled by an all-time high number of new accounts doing business with us," said iRhythm CEO and President, Quentin Blackford. "New account openings were up 22% quarter-over-quarter and revenue volumes increased 10% sequentially, underscoring our solid performance amidst a difficult market environment. With business highlights regarding reimbursement and our Zio Watch clearance already announced in July, we are pleased with the way that the second half of 2022 has begun."

“We also rounded out our executive leadership team with recent additions that position us well to advance our long-term strategies for sustainable growth in our core U.S. market, expand into greater international geographies and enter adjacent markets. The sizable opportunity ahead of us to bring our innovative technology platform powered by data-driven artificial intelligence to patients, clinicians, healthcare systems and payers gets us excited every day. We look forward to sharing more details on this vision at an investor day during the third quarter," concluded Mr. Blackford.

Second Quarter Financial Results
Revenue for the three months ended June 30, 2022 increased 25.6% to $102.1 million, from $81.3 million during the same period in 2021. The increase was primarily driven by Zio XT and AT volume growth and increases in Medicare pricing.

Gross profit for the second quarter of 2022 was $70.2 million, up 26.9% from $55.3 million during the same period in 2021, while gross margins were 68.8%, up from 68.0% during the same period in 2021. The increase in gross profit was primarily due to increased volume and average selling price, partially offset by increases in cost per unit.

Operating expenses for the second quarter of 2022 were $93.7 million, compared to $72.3 million for the same period in 2021 and $110.3 million in the first quarter 2022. The sequential decrease in operating expenses was due to the absence of one-time impairment and restructuring charges incurred in the first quarter 2022, associated primarily with a reduction in size of our San Francisco facility and severance and other employee exit related costs.

Net loss for the second quarter of 2022 was $23.9 million, or a loss of $0.80 per share, compared with net loss of $17.4 million, or a loss of $0.59 per share, for the same period in 2021.

Cash, cash equivalents and short-term investments were $204.5 million as of June 30, 2022.

Guidance
iRhythm projects revenue for the full year 2022 to range from $415 million to $420 million, which represents 29% to 30% growth over prior year results. Gross margin for the full year 2022 is expected to range from 68% to 69% and adjusted operating expenses are expected to range between $375 million and $385 million. Adjusted EBITDA for the full year 2022 is expected to range from negative $12.5 million to negative $17.5 million.

Webcast and Conference Call Information
iRhythm’s management team will host a conference call today beginning at 1:30 p.m. PT/4:30 p.m. ET. Investors interested in listening to the conference call may do so by accessing the live and archived webcast of the event, which will be available on the “Investors” section of the company’s website at: www.irhythmtech.com.

About iRhythm Technologies, Inc.
iRhythm is a leading digital health care company redefining the way cardiac arrhythmias are clinically diagnosed. The company combines wearable biosensor devices worn for up to 14 days and cloud-based data analytics with powerful proprietary algorithms that distill data from millions of heartbeats into clinically actionable information. The company believes improvements in arrhythmia detection and characterization have the potential to change clinical management of patients.

Use of Non-GAAP Financial Measures and Other Operating Metrics
We refer to certain financial measures that are not recognized under U.S. generally accepted accounting principles (GAAP) in this press release, including adjusted EBITDA, adjusted operating expenses and adjusted net loss. See the schedules attached to this press release for additional information and reconciliations of such non-GAAP financial measures.

Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These statements include those regarding financial guidance, market opportunity, ability to penetrate the market, anticipated productivity improvements and expectations for growth. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include risks described in the section entitled “Risk Factors” and elsewhere in our filing made with the Securities and Exchange Commission, including those on the Form 10-Q expected to be filed on or about August 5, 2022. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. iRhythm disclaims any obligation to update these forward-looking statements.

Investor Relations Contact:

 

Media Contact:

Stephanie Zhadkevich

 

Morgan Mathis

(919) 452-5430

 

(310) 528-6306

investors@irhythmtech.com

 

irhythm@highwirepr.com

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share data)

 

June 30,

 

December 31,

 

 

2022

 

 

 

2021

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

101,253

 

 

$

127,562

 

Short-term investments

 

103,238

 

 

 

111,569

 

Accounts receivable, net

 

57,380

 

 

 

46,430

 

Inventory

 

14,422

 

 

 

10,268

 

Prepaid expenses and other current assets

 

8,526

 

 

 

9,693

 

Total current assets

 

284,819

 

 

 

305,522

 

Property and equipment, net

 

65,923

 

 

 

55,944

 

Operating lease right-of-use assets

 

63,940

 

 

 

84,587

 

Goodwill

 

862

 

 

 

862

 

Other assets

 

20,142

 

 

 

16,052

 

Total assets

$

435,686

 

 

$

462,967

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

5,987

 

 

$

10,509

 

Accrued liabilities

 

49,954

 

 

 

51,486

 

Deferred revenue

 

2,977

 

 

 

3,049

 

Debt, current portion

 

 

 

 

11,667

 

Operating lease liabilities, current portion

 

11,498

 

 

 

11,142

 

Total current liabilities

 

70,416

 

 

 

87,853

 

Debt, noncurrent portion

 

34,927

 

 

 

9,690

 

Other noncurrent liabilities

 

952

 

 

 

697

 

Operating lease liabilities, noncurrent portion

 

84,749

 

 

 

85,212

 

Total liabilities

 

191,044

 

 

 

183,452

 

Stockholders’ equity:

 

 

 

Preferred Stock

 

 

 

 

 

Common stock

 

28

 

 

 

27

 

Additional paid-in capital

 

725,748

 

 

 

685,594

 

Accumulated other comprehensive loss

 

(583

)

 

 

(61

)

Accumulated deficit

 

(480,551

)

 

 

(406,045

)

Total stockholders’ equity

 

244,642

 

 

 

279,515

 

Total liabilities and stockholders’ equity

$

435,686

 

 

$

462,967

 

 

 

 

 

IRHYTHM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue, net

$

102,051

 

 

$

81,278

 

 

$

194,429

 

 

$

155,589

 

Cost of revenue

 

31,806

 

 

 

25,995

 

 

 

62,425

 

 

 

49,453

 

Gross profit

 

70,245

 

 

 

55,283

 

 

 

132,004

 

 

 

106,136

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

11,945

 

 

 

9,606

 

 

 

22,487

 

 

 

18,116

 

Selling, general and administrative

 

81,751

 

 

 

62,669

 

 

 

154,909

 

 

 

132,482

 

Impairment and restructuring charges

 

 

 

 

 

 

 

26,608

 

 

 

 

Total operating expenses

 

93,696

 

 

 

72,275

 

 

 

204,004

 

 

 

150,598

 

Loss from operations

 

(23,451

)

 

 

(16,992

)

 

 

(72,000

)

 

 

(44,462

)

Interest expense

 

(482

)

 

 

(307

)

 

 

(2,511

)

 

 

(642

)

Other income, net

 

69

 

 

 

55

 

 

 

85

 

 

 

179

 

Loss before income taxes

 

(23,864

)

 

 

(17,244

)

 

 

(74,426

)

 

 

(44,925

)

Income tax provision

 

33

 

 

 

116

 

 

 

80

 

 

 

214

 

Net loss

$

(23,897

)

 

$

(17,360

)

 

$

(74,506

)

 

$

(45,139

)

Net loss per common share, basic and diluted

$

(0.80

)

 

$

(0.59

)

 

$

(2.51

)

 

$

(1.54

)

Weighted-average shares, basic and diluted

 

29,843,141

 

 

 

29,318,894

 

 

 

29,720,415

 

 

 

29,242,089

 

 

 

 

 

 

 

 

 

IRHYTHM TECHNOLOGIES, INC.
Reconciliation of GAAP to Non-GAAP Financial Information
(Unaudited)
(In thousands)

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

Adjusted EBITDA reconciliation

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net loss

$

(23,897

)

 

$

(17,360

)

 

$

(74,506

)

 

$

(45,139

)

Income tax provision

 

33

 

 

 

116

 

 

 

80

 

 

 

214

 

Depreciation and Amortization

 

3,351

 

 

 

2,153

 

 

 

6,494

 

 

 

4,189

 

Interest expense, net

 

286

 

 

 

247

 

 

 

2,183

 

 

 

494

 

Stock-based compensation

 

15,098

 

 

 

10,260

 

 

 

29,001

 

 

 

30,490

 

Impairment and restructuring charges

 

175

 

 

 

 

 

 

27,041

 

 

 

 

Adjusted EBITDA

$

(4,954

)

 

$

(4,584

)

 

$

(9,707

)

 

$

(9,752

)


 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

Non-GAAP restructuring and impairment reconciliation

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Impairment and restructuring charges, as reported

$

 

 

$

 

 

$

26,608

 

 

$

 

Restructuring related consulting fees

 

175

 

 

 

 

 

 

433

 

 

 

 

Non-GAAP restructuring and impairment

$

175

 

 

$

 

 

$

27,041

 

 

$

 

 

 

 

 

 

 

 

 

Adjusted net loss reconciliation

 

 

 

 

 

 

 

Net loss, as reported

$

(23,897

)

 

$

(17,360

)

 

$

(74,506

)

 

$

(45,139

)

Impairment and restructuring charges, as reported

 

 

 

 

 

 

 

26,608

 

 

 

 

Restructuring related consulting fees

 

175

 

 

 

 

 

 

433

 

 

 

 

Adjusted net loss

$

(23,722

)

 

$

(17,360

)

 

$

(47,465

)

 

$

(45,139

)

 

 

 

 

 

 

 

 

Adjusted net loss per share reconciliation

 

 

 

 

 

 

 

Net loss per share, as reported

$

(0.80

)

 

$

(0.59

)

 

$

(2.51

)

 

$

(1.54

)

Impairment and restructuring charges per share

 

 

 

 

 

 

 

0.90

 

 

 

 

Restructuring related consulting fees per share

 

0.01

 

 

 

 

 

 

0.01

 

 

 

 

Adjusted net loss per share

$

(0.79

)

 

$

(0.59

)

 

$

(1.60

)

 

$

(1.54

)

 

 

 

 

 

 

 

 

Adjusted operating expense reconciliation

 

 

 

 

 

 

 

Operating expense, as reported

$

93,696

 

 

$

72,275

 

 

$

204,004

 

 

$

150,598

 

Impairment and restructuring charges, as reported

 

 

 

 

 

 

 

26,608

 

 

 

 

Adjusted operating expense

$

93,696

 

 

$

72,275

 

 

$

230,612

 

 

$

150,598